Come and point out everything that could go wrong with this plan

[Humuhumunukunukuapuaa]

Our kitchen is in desperate need of replacing. It's ancient and broken

We also have a lean to utility type room that is on the point of collapse

We have no £ of our own but DPIL have breezily said 'we'll lend it to you" (about £30k)

So if they did, could then then remortgage and pay them back but not be increasing our monthly outgoing?

Now this would assume that the value added would be equal to the cost but I'm pretty sure it would be

The area we live in didn't suffer during the downturn. Prices are still increasing. Near neighbour have recently sold for £10 and £15k each more than we paid 2 years ago

Prepare me for what could go wrong before I allow myself to get excited

gah. I didn't say; the £30k woukd be for an extension

Let me tempt you all on with some guessy maths

Current mortgage £165k
Current house value £215k
Value with extension £235k

Current mortage repayments £800

So if we remortgaged afterwards the new amount would have to be £195k to give us the £30k to repay pil. Is that right?

And can you even do that? Where would the £ for repayment come from?

But if you could would our LTV ratio have changed? (Can't do maths have discalcula)

The work alone will not increase the value by the amount it costs, I'm pretty sure of that. You will probably be ok in terms of capital gain as prices are going up, but don't really on the work alone to make it worth 30k more - I doubt it will, however nice it looks.

Assuming the house would be worth that much more and assuming that the bank would give you a remortgage for £195k, can you afford the repayments on the additional borrowing? If the answer is no then everything else is irrelevant.

I wouldn't borrow money from the ILs but thats just me!

However if you're happy to then do it. The longer you leave it the worse it'll get especially the lean to.

how many years left on your mortgage?

Putting a loan on a mortgage is an expensive way of getting a loan. You are paying interest on that amount over 25 years or whatever the term of the mortgage is.

Also it becomes a secured loan, against your house. So if at some point you can't make payments you lose the house, whereas you wouldn't on an unsecured loan.

Your loan to value if I've worked it correctly is:-

£165,000 of £215,000 = 76%
£195,000 of £235,000 = 82%

(I THINK that's right!)

Of course a valuer would have to agree with your values.

Your income would have to be enough to qualify for the new mortgage.

I've no problem now wowing from pil, they're fab in every way but only if I was sure we could repay them obviously

I think what I'm trying to work out is how much our mortgage would increase

But thinking out loud. If we're increasing the mortgage then where is the advantage of borrowing from pil?

Is it an unnecessary step

Couldn't we just increase the mortgage anyway, or is that not what is done anymore?

X post bowlers arm

Ah yes! Thank you, yes that would mean our LTV ratio dropped and I do believe you get a much better rate if you have 20%

Hmmm the plan has huge holes :(

if you borrow from PIL is the loan interest free?

That would be the advantage -but the interest rates are low at the moment so if your mortgage now is 25 years then you are paying 3.2%

if you borrow from PIL then if it is interest free this will save you som money.

if the interest rates go up to 5% then you will still be paying back PIl without paying any interest and so save money.

Have you had a quote for the work to be done?

I presume you've noticed that you are spending £30k to increase the house value by £20k? And you are right, borrowing from the ILs is an unnecessary step if you are going to remortgage anyway.

If the ILs are keen to lend to you, ie to do you a favour, could you (say) divide the £30000 that they lend you by the number of months outstanding on your mortgage and pay them back that each month, so they will have given you an interest-free loan? And if you want to remortgage because a lower loan-to-value is cheaper, then your loan-to-value would be even lower. And everything would be paid off at the end of your mortgage.

Can you repay the ILs monthly over a number of years? Otherwise you may as well just remortgage.

(octonauts fan btw??)

Ah ha janek that's my shit maths

Ummm yeah the loan from pil is possible but I'd really want to get it paid back to them ASAP

Although obvs v much in our interests to repay them than a bank

how much spare money do you save or have left over each month? Work out this amount and then see how quickly you could pay them off

Creature report creature report creature report...or 'those RUBBISH songs' as they're known in our house

Sorry wasn't calling you rubbish

None whatsoever ivykate and therein is the biggest problem of them all

sorry but that is a big problem because if the interest rates rise then how would you pay your mortgage?

Is there a way you can increase your income?

I am shocked it costs £30k for a kitchen and extension.

Do you need the lean to? Knock it down and just redo the kitchen if not. Much cheaper and quicker.

We've got a long fixed rate period and who knew we'd be entering the fourth year of a pay freeze :(

We probs could scrape together a couple of hundred a month but life would be mean and grim

We do really need the lean to, nowhere else for the washing machine and coats and boots. In fact we desperately need more room hence my fantasies of a nice kitchen / diner

30k is a lot of money to store a washing machine and coats and boots.

Why not look for a lean to on ebay and have your kitchen refitted, it would not be your dream kitchen but a lot smaller to clean and a darn site cheaper